Harley-Davidson Strategic Analysis

Comments (0)

Transcript of Harley-Davidson Strategic Analysis

Latin America & Asia Pacific sales growth higher than Europe and NAH-D's core US customer (40 - 49) is set to decline 2.5% between 2010 to 2015Global market lead, Honda introduces 2 new engines every year; Japanese rivals' average is 1; European average 1 every 2 years.Increasing importance of fuel efficiency, reduced emission, safety and agility.OverviewMarket Based ViewCompiled using SEC 10-K reports, January 30, 2013.Action PlanResource Based ViewOrganization Based ViewStrategic Issues PrioritizationKey Strategic IssuesFuture Strategic Options138180111057531367614139757413978511317024ConsultancyHarley-Davidson Case Analysis - Group 27Strategy Evaluation - SAFPrioritizationKey Strategic IssuesThe FutureMarket DevelopmentProduct Innovation/R&DInternational ExpansionSuccessAction PlansMBVRBVOBVStrategic IssuesRecommendationLong-termShort-termLong-termShort-termLong-termShort-termEV ForcesEconomic downturn since 2008Asian competitors have wider global distribution networkUnable to keep up with industry technological advancementsLack of focus on new generation safety and environmental conscious customersInability to share R&D costs across SBUsNew pollution and safety regulationsIndividual Competitor AnalysisHigher cost of productionRivals have multiple SBUs and share resourcesCompetitors have better customer-service recordNarrow product portfolio compared to competitorsHistory of recalls tainting brand reputationDeclining growth in mid-aged to old customer segmentCompetitors own significantly more patents than H-DExcessive commitment to traditionPESTELSteady decline in consumer spending on luxury products especially in North America and Europe (H-D's major markets)HOG's image as an "all-American" motorcycle cult; lack of connection to younger buyersBuell exit, a strategic mistake as it was well known for its innovative capacityNew EU and North American regulatory barriers on emission, safety and recycling Porter's 5 ForcesChanging customer taste in an industry where bargaining power of buyers is highJapanese manufacturers have cost advantage from economies of scale. Intensity of competition is very high as the industry is fragmentedKSFInsubstantial spending on R&D, NPDPoor distribution channel qualityManufacturing capability dependent on cheaper component imports from AsiaPoor sales supportLagging behind on design and technologyFinancial Result AnalysisResources & Strategy AnalysisRIASValue Chain AnalysisVRIOHistory of recalls affecting reputation: 2008 (47,579), 2011 (300,000), 2013 (29,000)"Club" like mentality of HOGHighly market focusedUS dealerships- poor stock and indifferent customer serviceAcquisition failures- 2008 (MV Agusta for $105 million, sold in 2010 for $3.9 million; Buell exit in 1998Product development efforts are limited to styles changes, new paint designs, and engineering improvement. Strong American style culture is not suitable for international expansion.Extremely high Total Debt/Equity ratio, 2013: 163.23% (Source: NASDAQ)Current ratio lower than industry average; implies high inventoryloyal customers are losing interest because everyone has a Harley bikeYounger customers less interested because of Harley's aging rider imageJapanese manufacturers imitate engine type, releasing similar cruiser motorcycles at lower price, as they have cost advantageH-D parts are bought from many suppliers and small manufacturers increasing manufacturing cost due to lack of bargaining strengthAcquisition errorsCustomization option increases production cost due to lack of economies of scaleTension between management and trade unionCSR & Ethics Analysis, Mission, Vision & Objectives Analysis, Cultural Web AnalysisStakeholder Analysis

H-D's dominance and experience in heavyweight segment, international brand awareness can be leveraged if these strategic plans are implemented.Strategic drift from tradition to market focus is necessary to utilize dynamic capabilities for future growth.Key to success will be product differentiation strategy, introducing new and innovative designs suited for regional demand in developed and emerging markets.TrucieFrankieAriesSaifulMarufConclusionJacksonSource: IBISWorldUSA - 2010JustificationSource: MSN Money